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Abu Dhabi, UAEMonday 22 October 2018

DP World launches $442m port expansion in Somaliland

The port operator is counting on Berbera to make up for loss of Djibouti

Sultan bin Sulayem shakes hands with Abdu Shamakh Al Shebani, CEO of Shafa Al Wahda Contracting Company as Saad Ali Shire, Foreign Minister of Somaliland looks on at Berbera Port Expansion contract award ceremony in Hargeisa. Pawan Singh / The National
Sultan bin Sulayem shakes hands with Abdu Shamakh Al Shebani, CEO of Shafa Al Wahda Contracting Company as Saad Ali Shire, Foreign Minister of Somaliland looks on at Berbera Port Expansion contract award ceremony in Hargeisa. Pawan Singh / The National

DP World has launched the first stage of its Berbera port expansion, designed to equip the Somaliland port for major vessels and transform it into one of Africa’s pre-eminent facilities in the breakaway region.

A ground breaking ceremony with Somaliland’s vice president, Abdirahman Saylici and DP World executives took place in the small coastal town at the tip of the Horn of Africa on Wednesday.

“Our aim is to make this an important regional hub for the maritime industry in the Horn of Africa,” DP World Chairman and CEO, Sultan bin Sulayem said at the official signing on Thursday.

Somaliland hopes the port expansion – which was first agreed in 2016 – will boost its economy by attracting other international investors, reduce unemployment and set it on the road to independence from Somalia. Somaliland, devoid of government support and international investment for decades, is one of the world’s poorest regions.

The move, however has attracted the ire of the Somali government. In March, its parliament in Mogadishu declared the deal “null and void”, but Hargeisa was unmoved.

“Somalia cannot interfere in our affairs,” warned Musa Behi Abdi, President of Somaliland, on Wednesday night.

View of DP World Berbera in Somaliland. Pawan Singh / The National
View of DP World Berbera in Somaliland. Pawan Singh / The National

The official contract signing on Thursday laid the groundwork for the first phase of the $101 million investment to expand the port yard by 250,000 square metres and modernise its facilities. Total investment of the two phases will reach $442m. The port's current capacity is around 150,000 twenty-foot equivalent units [a measure of ships container carrying capacity] and is set to expand to 450,000 TEUs once development is complete.

The firm will also create an economic free zone in the surrounding area, targeting a range of companies in sectors from logistics to manufacturing, and a $100m road-based economic corridor connecting Berbera with Wajaale in Ethiopia.

Long term DP World partner Shafa Al Nahda contracting will construct the port.

DP World holds a 51 per cent stake in the Berbera port, while Ethiopia holds 19 per cent and Somaliland the rest. In recent years, DP world has stepped up its investments in Africa in order to capture the continent’s growth potential.

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Read more:

DP World vows to defend rights in port dispute with Djibouti

London court bars Djibouti from considering DP World's pact terminated

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The port has traditionally relied on trans-shipment but the expansion will allow it to welcome major vessels, Adnan Al Abbar, a DP World senior vice president told The National at Wednesday’s ceremony.

Landlocked Ethiopia, a huge fast-growing consumer market with 100m people stands to benefit from the project, which will see imports flow to it through the economic corridor. It will also connect Berbera with the rest of east and central Africa.

For DP World, the expansion became more pressing when Djibouti seized the Doraleh container terminal in February, the main transit route to Ethiopia, which the Dubai firm has run since 2009.

Earlier this year, an arbitration court in London found Djibouti government to be in violation of the concession agreement, but it has as yet refused to return it and the stand-off continues.

“The government has made its final decision. It is over,” Djibouti’s ambassador to Somaliland Hussein Omar Kawleeye told The National on Thursday.

The ground breaking ceremony for the DP World Berbera at the Berbera Port in Somaliland. Pawan Singh / The National
The ground breaking ceremony for the DP World Berbera at the Berbera Port in Somaliland. Pawan Singh / The National

At a press conference after the signing, Mr bin Sulayem vowed DP World would not return to Djibouti but will continue its battle in the courts.

Mr Musa Behi said thousands of jobs will be created as a result of the port expansion and that DP World will rely on the domestic security apparatus of Somaliland, which includes the police, military and coast guard, to protect the port.

The presence of a UAE military base in Berbera is also likely to increase security.

Although the first round of financial investment is occurring now, the company has been involved in Berbera port for two years, leading to a 50 per cent increase in capacity and a 30 per cent boost in cargo since 2016.

Mohammed, a Somaliland-born lasher who has worked at the Berbera port for six years, told The National that his salary and working conditions had improved since DP World took control.

“I used to work 12 hour days,” he said. “Now I work eight.”

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